HARP: Most Underwater Getting Least Amount of Helpby Tim Manni
We’ve been receiving a lot of comments from readers who say that their lenders aren’t honoring the home affordable refinance program’s (HARP’s) expanded loan to value (LTV) ratio of 125%. (Another way to express “125% LTV” would be “borrowers who are 25% underwater.”) Based on some numbers that we found, there seems to be some real validity to their complaints.
While rooting around the web for some HARP numbers, we discovered a report from the Federal Housing Finance Agency (FHFA) that clearly shows what readers have been so frustrated about. It appears as though the borrowers who are the most underwater — the audience HARP was designed to help — have gotten the fewest amount of refinances.
Beginning on April 1, 2009, HARP allowed borrowers to refinance up to 105% of the value of their home. On July 1, 2009, HUD Secretary Shaun Donovan announced that loans with an LTV of up to 125% would now be refinanced under HARP. Federal officials concluded that by expanding the eligibility of the effort, more underwater homeowners will be able to refinance, spurring the recovery of the housing market. But has this happened?
According to a March 24, 2010 release from the FHFA (page six):
Fannie Mae: 144, 225 (Jan. 2010) / 2,028,710 (Inception to Date)
Freddie Mac: 107, 590 (Jan. 2010) / 1,431,353 (Inception to date)
HARP LTV >80%-105%
Fannie: 15, 519 (Jan. 2010) / 118,666 (Inception to Date)
Freddie: 14,750 (Jan. 2010) / 99, 860 (Inception to Date)
HARP LTV >105%-125%
Fannie: 626 (Jan. 2010) / 1,596 (Inception to Date)
Freddie: 717 (Jan. 717) / 1,670 (Inception to Date)
Let’s take a look at some of the comments our readers sent in:
Although the Making Home Affordable program adjusted to 125 percent of loan-to-value from the original 105 percent, lenders AREN’T MAKING LOANS at that rate. I’ve talked to three or four, and they’ll only go as high as 105%. I need 120%.
I have been denied a 125% LTV under HARP, but meet all of the guideline criteria. They have told me before that MI is causing my rejection and that no MI companies support HARP. Wrong – the MI company on my mortgage has documentation on their website explicitly stating their compliance with the HARP 125% LTV. When presenting this to Bank of America, they had no answer. Just simply stated that they don’t currently have a program for the 125% LTVs and that a lot of effort goes into creating a program.
I am unable to get Aurora Loan Services to honor the 125% LTV refinance under the HARP. They are only going up to 95% and want me to come up with the difference. I suspect they just want me to continue paying the full amount as it works for them. Anyone able to get a Fannie Mae backed loan to honor the 125%? Anyone able to get over 100% LTV refinance?
My lender, US Bank, is honoring the 125% LTV cap. However, I have to pay out around $700 (app fee, credit report fee, and appraisal fee) before I even find out if my loan will be approved.
Lukasz Z writes:
I qualify for the 125% LTV HARP but unfortunately Bank of America has been giving me the runaround for months.
I have been in contact with 5 different representatives at BoA and every week/month it’s the same story, they do not currently support the 125% LTV HARP program and I need to call back next week or month depending who I talk to or require me to pay $50k so I can meet their 105% LTV program. They are not denying its existence, they are just not offering it. It drives me nuts how many excuses I’ve heard so far.
READERS: For anyone who has gotten a HARP refinance, what was your LTV at the time?